Labour

Informalisation within the Formal Sector 

Context: In recent decades, India has witnessed a sharp rise in the use of contract labour within the formal manufacturing sector.

Relevance of the Topic: Prelims: Concept of Contractualisation. Mains: Informalisation with formal sector - Reasons, Impact, Way Forward.

According to the Annual Survey of Industries (ASI), the share of contract workers in the manufacturing workforce has doubled from 20% in 1999-2000 to 40.7% in 2022-23. 

This trend reflects the informalisation of the formal sector, raising concerns over worker exploitation, wage inequality, and declining productivity.

What is Contractualisation?

  • It refers to the employment of workers on temporary, often third-party contracts, rather than permanent, directly employed roles. 

Why Firms Prefer Contract Labour? 

  • Operational Flexibility: Allows firms to hire or fire workers based on market demand.
  • Cost Savings: Wages and benefits are significantly lower than for permanent workers.
  • Regulatory Evasion: Firms bypass rigid labour laws and industrial regulations.
  • Short-Term Efficiency: Contract workers may fill temporary skill gaps or meet seasonal demand.

However, these apparent benefits mask deeper structural challenges and long-term inefficiencies.

Challenges associated with Contractualisation: 

  • Legal Exclusion & Vulnerability: Contract workers are generally excluded from key protections under the Industrial Disputes Act, 1947, such as safeguards against arbitrary dismissals and retrenchment. Hired through third-party contractors, they lack bargaining power and often face exploitative work conditions.
  • Wage Disparities: In 2018-19, on an average, the contract workers earned 14.47% less than regular employees. In some sectors, employers' labour cost on contract workers was up to 85% lower than on regular workers.
  • Impact on Labour Productivity: Though intended to provide flexibility, over-reliance on contract labour can undermine productivity, especially in labour-intensive and small-to-medium enterprises. ASI Plant-Level Data (1999-2019) shows that Contract Labour-Intensive (CLI) enterprises had 31% lower productivity than Regular Labour-Intensive (RLI) enterprises.

Why Productivity Declines?

  • Principal-Agent Problem: Contractors may not align with the firm's long-term interests.
  • Moral Hazard: Low job security may lead to worker disengagement.
  • Poor skill development: Frequent exit and replacement of workers in a company or industry over a short period of time prevents skill development and innovation.
  • No On-the-Job Training: Firms avoid investing in temporary workers.

Exceptions:  

  • Labour productivity was 5% higher in high-skill Contract Labour-Intensive (CLI) enterprises when compared to their low-skill counterparts, with the productivity advantage increasing significantly to 20% in large high-skill CLI enterprises. 
  • Similarly, large-size capital-intensive CLI enterprises recorded a 17% gain in labour productivity. 

However, such types of enterprises account for only about 20% of the total formal manufacturing. The remaining 80% of the enterprises were adversely affected by contractualisation.

Policy Landscape and Reforms:

Labour Code on Industrial Relations 2020: 

  • The code allows firms to hire non-regular workers on fixed-term contracts directly without third party contractors. Aims to provide greater flexibility in hiring and firing. 
  • It also seeks to curb the exploitation of non-permanent workers by mandating the provision of basic statutory employment benefits. 
  • Yet to be fully implemented; trade unions fear it may further increase informalisation.

Pradhan Mantri Rojgar Protsahan Yojana (2016-2022):

  • Aim: To incentivise job creation in the formal sector by bearing employer’s contribution (12%) to Employees’ Pension Scheme (EPS) and Employees’ Provident Fund (EPF). 
  • Though over one crore employees benefitted from the scheme, it was discontinued in 2022.

Way Forward

  • Policymakers can incentivise firms to adopt reasonably longer fixed-term contracts by offering concessions in social security contributions or subsidised access to government skilling programmes. This could enhance workforce stability and support skill accumulation, while also assuaging labour union fears about the potential rise in the precarious employment. 
  • Reviving and extending support under the PMRPY could help curb the misuse of contract labour and promote formalisation in the manufacturing sector.

Gig Workers Missing from PLFS

Context: The Periodic Labour Force Survey (PLFS), India's primary source for labor statistics, lacks a clear classification of Gig Workers. Gig workers are subsumed under broad categories such as ‘self-employed’, ‘own-account workers’, or ‘casual labour’ in the PLFS. This leads to their under-representation in official data.

Relevance of the topic:

Prelims: Concept of Gig Worker, Platform workers. 

Mains: Gig workers: Growth drivers, benefits, challenges, recommendations.

Gig Workers: 

  • Gig workers were first incorporated into the legal framework through the Code on Social Security 2020. 
  • The Code on Social Security defines a Gig Worker as a person who participates in a work arrangement and earns from such activities outside of a traditional employer-employee relationship. The above definition separates gig workers from both formal and informal categories.
  • The Code on Social Security, 2020 defines Platform Work as a work arrangement outside of a traditional employer - employee relationship in which organisations or individuals use an online platform to access other organisations or individuals to solve specific problems or to provide specific services or any such other activities which may be notified by the Central Government, in exchange for payment.
  • According to NITI Aayog’s 2022 report ‘India’s Booming Gig and Platform Economy,’ the gig workforce is expected to reach 23.5 million by 2029-30. Presently around 77 lakh workers (1.5% of workforce) are employed in the Gig Economy and it is expected to increase to 2.35 crore workers by 2029-30.
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Gig Workers face multifaceted challenges such as: 

  • Non-recognition of workers as employees
  • Job and income insecurity 
  • High commission and unfair penalties charged by platform companies 
  • Lack of social security
  • Inability to form trade unions, lack of career growth and skill upgradation etc.
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Lack of clear classification of Gig Workers in PLFS: 

  • One of the major challenges is lack of clear classification of Gig Workers in India’s primary labour statistics source, the Periodic Labour Force Survey (PLFS).
  • Gig workers are subsumed under broad categories such as ‘self-employed’, ‘own-account workers’, or ‘casual labour’ in the PLFS.

It has following implications:  

  • Lack of a distinct category leads to statistical invisibility, making gig workers’ vulnerabilities and working conditions under-represented in official data.
  • Social protection schemes under the Code on Social Security, 2020 such as the Social Security Fund and the National Social Security Board depend on PLFS data for evidence-based policy making. However, absence of a distinct classification for gig and platform workers in the PLFS undermines the goal of evidence-based policymaking. Inaccurate classification results in uneven access to welfare schemes and exclusion errors.

The 2025 PLFS revision introduced some important updates: a larger sample size, monthly estimates, and better rural representation. However, it still does not address the issues of how gig work is defined and understood.

In response to a query in Rajya Sabha, the Ministry of Statistics and Programme Implementation stated, “No update in the PLFS Schedule has been undertaken with the objective of specifically identifying persons engaged in the gig economy”. 

However, all market activities performed for pay or profit, including gig work, fall under the scope of economic activity in the PLFS. Anyone engaged in such work during the reference period is considered employed. 

Way Forward

NITI Aayog in its report titled “India’s booming Gig and Platform economy” has given following recommendations: 

  • Official labour survey reports such as PLFS should collect data related to Gig Workers.
  • Launch Platform India Initiative on the lines of the Start-up India to provide handholding, funding support, skill development etc. to Gig Workers.
  • Accelerate financial inclusion: Unsecured loans to first-time borrowers may be classified as Priority Sector Lending.
  • Skilling and Issuance of skill certificates by platform companies to enhance employability of Gig Workers.
  • Enhancing Social Inclusion: Platform businesses should partner with NGOs to employ women and people belonging to vulnerable sections.
  • Enhancing Social Security: E.g., Provide Paid Sick Leave and Occupational Disease and Work Accident Insurance on the lines of Indonesia’s model.

Also Read: What is a Gig Worker? - Definition & Meaning 

Right to Dignified Work: ASHA Workers' Struggle

Context: ASHA (Accredited Social Health Activists) workers in Kerala are protesting for better wages and working conditions. Their work is critical for public health but remains undervalued due to its association with traditional gender roles.

Relevance of the topic:

Prelims: Key facts about Government Schemes, Welfare Programs, Social Issues

Mains: Can be used as an example in issues related to Health sector & Governance; Gender Issues in Employment.

Key Highlights of the Issue

  • Gendered Assumptions: Women dominate state-run welfare schemes (E.g., Anganwadi, ASHA workers). Their work is considered an extension of domestic care, leading to undervaluation and low pay.
  • Payment and Working Conditions: 
    • Despite WHO recognition (2022), ASHAs remain underpaid. Kerala pays ₹7,000 per month, among the highest in India, but still below the minimum wage for unskilled workers. 
    • Payments are often irregular due to dependence on central and state funding. Economic Survey (2022-23): India spends only 2.1% of GDP on healthcare, below the WHO-recommended 5%.
  • No legal status as Workers: ASHAs are seen as "activists" rather than "workers", denying them labour rights. Despite their role in critical health interventions, they lack social security and job stability. ILO Recommendation (2018): Urged nations to formalise care workers, but India is yet to implement.

Demands of ASHA workers (in Kerala) include

  • Formal worker status
  • ₹21,000 honorarium
  • ₹5 lakh as retirement benefits. 

Benefits of Recognising ASHA Workers as formal workers: 

  • Financial Security : Regular wages instead of incentives. E.g., 63% care workers are Women (ILO Report 2021) 
  • Better Working Conditions: Formalisation would bring job security, healthcare benefits, and social security. 
  • Women Empowerment: Economic independence and dignity at work. E.g., Only 32% women earn their own income (NFHS-5 2021-22). 
  • Strengthened Healthcare System: Motivated workforce ensures better community health services. E.g., ASHA workers played an important role in COVID-19 response.  

Way Forward

  • Formalisation of ASHA Workers: Recognise them as public health workers under labour laws. Provide fixed salaries, job security, and social security benefits.
  • Legal Recognition & Labour Rights: Implement ILO Convention 189 (Decent Work for Domestic Workers). Ensure EPF, ESI, and pension benefits.
  • Timely and Increased Payment: Kerala Model: ₹21,000 minimum wage demand should be considered nationwide.
  • Political and Social Awareness: Recognise unpaid and underpaid care work. NITI Aayog (2021): Recommended monetising unpaid care work to boost GDP. 

ASHA workers are vital to India’s healthcare system but remain undervalued. As Amartya Sen highlights, true development expands freedoms, which includes fair wages and dignity at work. Formalising their roles, ensuring social security, and increasing healthcare investment will align with PM Modi’s vision of ‘Sabka Saath, Sabka Vikas’ and create a gender-inclusive, resilient public health system.

India's Labour Market: Key Trends

Context: India’s labour market is witnessing a shift from jobless growth to rising employment across sectors. Various surveys highlight increasing job creation, especially in manufacturing, MSMEs, and rural non-farm employment.

Relevance of the Topic: Prelims: India’s labour market- Trends.

Survey findings on Employment Trends

  • MSME Udyam Portal: Jobs increased from 121 million (2023) to 201.9 million (2024).
  • Annual Survey of Industries (ASI) FY23: Manufacturing employment rose by 7.5% (from 17.2 million in FY21 to 18.4 million in FY23).
  • Periodic Labour Force Survey (PLFS): Manufacturing employment growth increased from 1.15% p.a. (2017/18-19/20) to 5.8% p.a. (2019/20-22/23).
  • RBI KLEMS Database: 46.7 million jobs were created in FY24, more than double the 19.1 million in FY23.

Women's Labour Force Participation Rate

  • Rural Job Diversification and Women's LFPR: 
    • Increasing shift of males to rural non-farm employment (RNFE) has led to higher women’s labour force participation rate (LFPR).
    • PLFS 2023-24: 
      • 59.8% of rural workers are in agriculture, with the rest in RNFE.
      • The share of male workers in agriculture fell to 49.4% and that of females rose to 76.9%.
    • Study in Eastern UP (2006-2023):
      • Agricultural income growth: 0.1% p.a.
      • RNFE (including remittances) growth: 7.3% p.a.
      • Agriculture’s share in household income: fell from 22% to 8%.
    • Rural manufacturing employment grew at 4%, exceeding urban manufacturing growth of 3.8%.
  • Urban women’s LFPR is rising due to higher incomes, availability of household help, and reduced household constraints. 

Wage growth and Income patterns

  • PLFS 2023-24:
    • The self-employed had the highest wage growth (9.6%).
    • Casual workers saw 7.4% growth, with a daily wage of ₹433.
    • Regular wage earners had a lower wage growth of 5.5% (₹21,103 monthly).
  • ICRIER Analysis of PLFS Data:
    • Since 2019, urban nominal wages grew at 6% p.a., while real wages rose by only 0.5% p.a.
    • Real wages remain largely constant due to labour absorption trends.
    • Higher real wage growth without productivity rise could lead to inflationary pressures.
  • Lessons from previous wage growth:
    • 2010-2013: Real wage growth in rural areas peaked at 7% due to high post-GFC fiscal deficits and food inflation.
    • Post-2013: Real wages stabilized due to financial tightening and economic corrections.
    • Wage growth must align with productivity to remain sustainable.
  • Real Private Final Consumption Expenditure (PFCE):
    • Fell after the pandemic but recovered to 7% growth in FY25.
    • A slight dip to 6% in Q2 was cyclical and expected to reverse with financial easing.
    • Sustaining consumption requires continued income growth and employment generation.

Economic growth and Job creation: 

  • Growth averaged 8.3% (2021-24), providing stability for job creation. Earlier periods of jobless growth were marked by economic volatility.
  • Labour Market Trends (FY25):
    • Q2 FY25 saw GDP growth dip to 5.4% and unemployment rise to 6.6%.
    • Q3 FY25: Government capital expenditure revival led to UR falling to 6.4%.

Youth Unemployment: 

  • High youth unemployment often results from aspirational job-seeking. Above 35 years, unemployment declines as job-seekers settle for available opportunities.
  • Government jobs remain highly sought after due to higher entry-level pay, job security, and lesser workload.
  • If government jobs shift to contract-based hiring, youth unemployment may decrease significantly.

Corporate Investment and Productivity: 

  • The post-reform period saw rising labour productivity benefiting corporate margins more than wages.
  • Policy tools needed:
    • Incentives (Carrots): Encouraging investment and job creation.
    • Regulations (Sticks): Ensuring wage growth aligns with productivity.
  • External shocks create uncertainty, affecting business expansion.
  • India’s post-pandemic policies have helped sustain growth despite global volatility.

Policy recommendations for Job sustainability

  • Skilling and Training: Enhancing workforce capabilities for higher productivity.
  • Job-specific training: Ensuring alignment with industry demands.
  • Labour market flexibility: Balancing worker security with employer needs.
  • Macroeconomic stability: Maintaining steady growth to encourage hiring.
  • Continued policy support: Implementing countercyclical policies to absorb global shocks.

ILO lauds India’s Social Security Network

Context:  Citing the “World Social Protection Report 2024-26”, Director-General of International Labour Organisation applauded India citing the country’s social protection coverage has almost doubled from 24% to 49%, in a very short time. 

Relevance of the topic:

Prelims: International Labour Organisation.

Mains: Social Security network in India.

World Social Protection Report 2024-26: India's Achievements

  • Increase in Social Protection Coverage:
    • The proportion of the population covered under at least one branch of social protection increased from 24.4% in 2018 to 48.8% in 2022. 
    • Government's welfare schemes, insurance, and pension programs helped to ensure that vulnerable sections of society receive adequate support.
  • Leveraging digital platforms:
    • Digital platforms like e-Shram have been utilised to register and track informal workers.
    • This helps in ensuring that they have access to employment opportunities and social security benefits. 

India's Economic Transformation

  • Unemployment Rate:
    • Substantial decline from 6% in 2017-18 to 3.2% in 2023-24, highlighting the positive impact of various employment-generating initiatives and labour reforms. 
    • This reduction reflects improved job creation, particularly in sectors like manufacturing, services, and the gig economy.
  • Labour Force Participation Rate (LFPR):
    • Increased from 49.8% to 60.1%, indicating that more individuals are entering the workforce. 
    • This rise is attributed to skill development programs, increased formal sector opportunities, and the integration of women and youth into the labour market.
  • Consolidation of Labour laws: India has merged 29 existing labour laws into 4 comprehensive labour codes. The four codes are:
    • Code on Wages: Establishes minimum wage norms and ensures timely payment to all workers.
    • Code on Occupational Safety, Health, and Working Conditions: Aims to provide safe working environments and regulate working hours.
    • Code on Industrial Relations: Simplifies dispute resolution processes and promotes harmonious employer-employee relations.
    • Code on Social Security: Extends social security benefits like pensions, health insurance, and maternity benefits to a wider workforce.

Major Social Security Initiatives

  • Pradhan Mantri Jan Dhan Yojana (PMJDY): 
    • A financial inclusion program ensuring access to banking facilities, credit, insurance, and pension.
    • Over 500 million bank accounts opened, empowering the economically weaker sections.
  • Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY):
    • Life insurance cover of ₹2 lakh for individuals aged 18-50 at a premium of ₹436 per annum.
    • Provides financial security to families after the death of the primary earner.
  • Pradhan Mantri Suraksha Bima Yojana (PMSBY):
    • Accidental insurance cover of ₹2 lakh for a premium of ₹20 per annum.
    • Targets workers in high-risk sectors, offering them protection against accidental disabilities and death.
  • Atal Pension Yojana (APY):
    • Pension scheme for workers in the unorganised sector, providing a monthly pension of ₹1,000 to ₹5,000 upon retirement.
    • Promotes long-term financial planning among low-income groups.
  • Employees' State Insurance Scheme (ESIS):
    • Offers medical care, sickness benefits, maternity benefits, and employment injury benefits to employees.
    • Ensures comprehensive welfare for industrial workers and their dependents.
  • National Social Assistance Programme (NSAP):
    • Provides pension support to the elderly, widows, and disabled individuals from BPL families.
    • Acts as a safety net for the most vulnerable sections.
  • e-Shram Portal:
    • A database of over 280 million informal workers enabling direct benefit transfers and inclusion in welfare schemes.
    • Facilitates portability of benefits for migrant workers.

Impacts of Labour Codes: 

  • Promoting labour welfare by providing uniform social security to all workers, including gig and platform workers.
  • Universalising wages to ensure equitable remuneration.
  • Enhancing ease of doing business through simplified registration, licensing, and compliance procedures.
  • Improving working conditions by mandating health and safety standards. 

About International Labour Organisation (ILO)

  • It is a specialised agency of the United Nations (UN) dedicated to improving labour conditions and living standards throughout the world.
  • History:
    • It was created in 1919, as part of the Treaty of Versailles that ended World War I, to reflect the belief that universal and lasting peace can be accomplished only if it is based on social justice.
    • In 1946, the ILO became a specialised agency of the newly formed UN.
  • Headquarters: Geneva, Switzerland.
  • Members: The ILO has 187 member states: 186 out of 193 UN member states, plus the Cook Islands.
  • Structure: It is the only tripartite U.N. agency that brings together governments, employers and workers’ representatives of 187-member States.
  • It serves its tripartite constituents, and society as a whole, in a variety of ways, including:
    • Formulation of international policies and programmes to promote basic human rights, improve working and living conditions, and enhance employment opportunities.
    • Creation of international labour standards backed by a unique system to supervise their application.
    • An extensive programme of international technical cooperation formulated and implemented in an active partnership with constituents, to help countries put these policies into practice in an effective manner.
    • Training, education, and research activities to help advance all of these efforts.
  • In recognition of its activities, the ILO was awarded the Nobel Prize for Peace in 1969.
  • Key publications of ILO:
    • World Employment and Social Outlook
    • Global Wage Report
    • Global Estimates on International Migrant Workers
    • Unemployment Rate Index
    • World Social Protection Report 

Labour Welfare in India

Context: Lack of implementation of Labour Codes and Inefficiencies with the current legislative frameworks for labour welfare, calls for attention into the falling state of labour conditions in India.

Relevance of the Topic: Mains: Labour Welfare: Framework and challenges.

What is Labour Welfare?

  • Definition: In India, labour welfare refers to various measures undertaken by both the government and employers to improve the working conditions, well-being, and overall quality of life of workers and industrial workers.
  • Objective:
    • To address the social, economic, and health needs of workers and their families.
    • To ensure a better standard of living for the workforce.
  • What does it include? 
    • Provisions for safe working environments
    • Reasonable working hours
    • Fair wages
    • Access to healthcare
    • Housing facilities
    • Education for workers’ children
    • Social security benefits

Framework Regarding Labour in India

  • Constitutional Framework:
    • Labour is a subject in the Concurrent List. Thus, both Central and State governments are competent to enact legislation.
  • Judicial Interpretation: 
    • The Supreme Court emphasised “the principle of ‘Equal pay for Equal work’, to be achieved through Article 14, 16 and 39 (c) of Indian Constitution.” (Randhir Singh vs Union of India).
  • Legislative Framework: India has enacted four labour codes to consolidate 29 outdated laws to simplify and modernise existing labour laws and improve working conditions of labour. They include-
    • Code of Wages, 2019
    • Industrial Relations Code, 2020
    • Social Security Code, 2020
    • Occupational Safety, Health and Working Conditions Code, 2020.
  • Expansion of Social Security Net: 
    • The Code on Social Security, 2020 aims to widen the scope of social security schemes to include unorganised workers, gig workers and platform workers. 

Benefits of Labour Codes

  • Simplification of the Complex laws: Consolidate 29 Central laws, thus reducing multiplicity of definition and authority for businesses.
  • Easier Dispute Resolution: The codes simplify archaic labour laws and revamp adjudication processes, which will lead to quicker dispute resolution. 
  • Gender Parity:
    • All sectors must allow women to work at night.
    • Employers must ensure that security arrangements are made for them.
    • Women must consent before working at night.
  • Ease of Doing Business: These reforms will boost investment and make doing business easier.

Issues associated with Labour Welfare

  • Labour codes are not operational:
    • Implementation of labour codes has been delayed repeatedly due to state-level compliance issues and stakeholder resistance, with no clear indication when they will be operational.
    • The primary challenge is the shared jurisdiction over labour laws between India’s central and state governments.
      • The central government has passed the codes, but the state governments are responsible for drafting and notifying their own rules under each code, before they can be fully implemented. 
      • This duality has led to significant inconsistencies, and states are yet to finalise their rules under these codes.
  • Poor Implementation of Building and Other Construction Workers Act:
    • Many State governments have not reconstituted the welfare boards or implemented the BOCW Act effectively.
    • As per the recent CAG report, the welfare boards have not yet used the cess worth ₹70,744.16 crore, collected from the employers for the welfare of the workers, under the BOCW Act. 
    • Benefits like free temporary accommodation, drinking water and sanitation facilities to workers, remain unfulfilled. 
  • Concerns with Labour Codes:
    • Code on Social Security has provisions for self-assessment of cess by the employer, concerning contributions meant for workers’ welfare. This has the risk of underreporting by the employers, in the absence of any external regulatory check, and thus, could evade employer accountability. The Code also reduced the rate of cess and interest.
    • The statutory entitlements to workers under the BOCW Act are now subject to prescription by the Union government, under the new code. This means that there is no right to workers to these facilities, if not prescribed. 
  • No Recognition for Invisible Labour: 
    • Childcare, household work, looking after elderly are some examples of unpaid work and constitute invisible labour. They go unnoticed, unrecognised and are thus unregulated. The labour codes are silent about invisible labour. 

Read More: Analysis of Labour Codes 

Way Forward

  • Vocational Training: Establish accrediting agencies & vocational training institutes to provide skill-based training to the labour workforce.
  • Social Security: State governments should codify laws for implementation of the new labour codes and the welfare of unorganised workers.
  • Create centralised employment platforms to register workers, and connect workers with potential employers, to match the demand-supply gap. 

Along with these, it is also essential that we adopt a futuristic approach when it comes to protecting workers and handling disputes regarding Automation and Robotics, AI-powered workforces, and bioengineering, which may hamper workers' rights in the future.

ILO Report: Global Estimates on International Migrants

Context: The 4th edition of the International Labour Organisation’s (ILO) Global Estimates on International Migrant Workers was released in December 2024. International Migrants not only address the labour market shortages in host nations but also send remittances to their home countries, thus making significant contributions to the world economic growth. 

Relevance of the Topic Prelims: Organisation based questions on UN and ILO; Basic idea of trends of international migration and their contribution. 

Major Highlights of Report: 

  • Global migrant estimates: The report estimates approximately 169 million international migrant workers recorded in 2022.
    • This accounts for 4.7% of the global workforce.
    • Note: Global workforce stands for the number of people employed or unemployed, but are willing to work.
  • Incremental trend: The estimate of migrant workers has increased from previous years, i.e., 164 million in 2017 and 150 million in 2013.
  • Regional distribution: Over 68.4% of all migrants are in high-income nations like Europe, North America and Arab states.
  • Gender disparity: The report has highlighted the evident gender disparity in the migrant labour force
    • Only 38.7% of female migrants are employed as compared to the 61.3% of male migrants. 
    • Females are predominantly employed in the service sector, that too in the sectors associated with the care economy. 
  • Sectoral distribution of migrants: Migrant population dominates the service sector i.e., 68.4% migrants are employed in the service sector.
    • Female migrants dominate the service sector 80.1% females as compared to 60.8% male counterparts.
  • Comparison with the non-migrants: 
    • The service sector is out-numbered by migrants.
    • The manufacturing sector is marginally dominated by migrants.
    • The agriculture sector is predominantly handled by non-migrants.  
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Challenges highlighted by the Report

  • Gender-bias: The data of the report highlights the gender based biases, as most female migrants are part of the care economy. Also, the unemployment rate is higher in females as compared to males.
  • Economic vulnerability: The report also highlights the low wages and exploitative conditions of laborers. Also, the lack of social security leaves the labour in distress during any negative event.
  • Barriers in employment: Qualification and skill deficit along with the language barriers hinders the labour to adjust in the country of migration.
  • Social isolation: Migrants often face Xenophobia, racism and social exclusion that further marginalises them in the host societies.
  • High cost of migration: Migrants often pay exorbitant fees to recruiters leading to debt and financial burdens due to which workers fall victim to trafficking and forced labour. E.g., the Kafala System of Arab nations.

About International Labour Organisation

  • International labour organisation (ILO) is a specialised United Nations agency that focuses on promoting social justice and internationally recognised human and labour rights. 
  • Objectives of ILO: 
    • Promote decent work for all
    • Advance social and economic justice
    • Establish international labor standards
    • Advocate for workers’ rights, social protection and inclusive employment opportunities.
  • Major publications: World employment and social outlook; Global Wage Report; Global estimates on International Migrant Workers; Unemployment Rate Index.
  • India and ILO: 
    • ILO was established in 1919, where India was one of the original members. Narayan Malahar Joshi, founding member of All India Trade Union Congress, joined it. (Social Service League of 1911 is also associated with NM Joshi)
    • ILO has eight core conventions, of which India has not-ratified two conventions: 
      • No. 87: Freedom of Association and Protection of Rights to Organise Convention
      • No. 98: Right to Organise and Collective Bargaining.
    • In 2017, India ratified ILO Conventions No. 138 and 182, signaling its legal commitment to the elimination of child labour.

Reduction in Domestic Migration

Context: As per the Economic Advisory Council to the Prime Minister (EAC-PM) Report, “400 Million Dreams” the domestic migration has reduced by 11.78% as compared to 2011 census. 

Relevance of the Topic Mains: Labour issues and Migration led economy. 

Major Highlights:

  • The EAC-PM has highlighted the reduction in migration rate from 37.64% in 2011 to 28.88% in 2023. In 2023, the estimated number of migrants is about 40.20 crore as compared to 45.57 crore in census 2011. 
  • Three datasets were used to estimate the data:
    • Indian Railway Unreserved Ticketing System data on passenger volume. 
    • Mobile telephone roaming data from TRAI
    • District level banking data on remittances 
  • Cities attracting the most migrants: Mumbai, Bengaluru, Kolkata, Delhi and Hyderabad. 
  • West Bengal, Rajasthan and Karnataka have shown maximum growth in migrant arrivals. 
  • Hypothesis for trend: Report suggests improvement in health, education and economic opportunities in small cities as the reason for reduction in the migration rate. 

Other Possible Reasons for Reduction in Migration

  • Reduced urban center attraction: The urban centers are suffering from decaying infrastructure, high inflation and poor housing conditions. This can reduce the migration towards the urban centers. 
  • Preference to short distance migration: Migrants from semi-urban centers can prefer short distance migration to seek better economic opportunities.
  • Policy factor: Government policies like Aspirational District Programme has promoted the jobs and quality of life in tier-2 and tier-3 cities, reducing migration
  • Emerging labour opportunities: Percolation of development to the semi-urban areas especially the infrastructure projects creates a labour market in the small towns. 

Also Read: Migration in India: Current Issue and Challenges 

About EAC-PM

  • Economic Advisory Council to the Prime Minister is an independent, non-constitutional and non-permanent body formed to provide objective advice on economic policy matters to the Prime Minister. 
  • It consists of a chairperson, followed by experts from domains like economy, finance, agriculture etc.

Conclusion: The findings in the report not only highlights the migration pattern but also indicates the potential better economic conditions in semi-urban areas, reducing the necessity of migration to urban centers. 

India Skills Report 2025 

Context: Kerala continues to shine as one of the most employable States in India, as indicated by the recently launched India Skills Report 2025.

Relevance of the Topic: Prelims- Key facts about India Skills Report and their findings.

Key Findings of India Skills Report 2025:

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  • India’s National Employability stands at 54.8% indicating a significant pool of talent scoring above 60% on the Wheebox Global Employability Test (GET) with Maharashtra leading with 84% employability followed by Delhi (78%), Karnataka (75%), Andhra Pradesh (72%), Kerala (71%) and Uttar Pradesh (70%).
  • Male employability is slightly higher (53.47%) than female (46.53%) with Andhra Pradesh, Karnataka, Maharashtra, and Uttar Pradesh emerging as top states with male employable resources while Rajasthan leads in female employability followed by Gujarat and Kerala.
  • Kerala is one of the top States favoured for employment, alongside Tamil Nadu, Maharashtra, and Uttar Pradesh.
  • 93.22% of users expressed strong interest in internships with Tamil Nadu showing the highest preference for internships, followed by Uttar Pradesh, Kerala, and Karnataka. 
  • The report highlights that over half of Indian graduates are now employable, a significant rise from 33% a decade ago.
    • This 17% increase over ten years underscores India's dedication to developing a future-ready workforce equipped to meet the demands of a rapidly changing global economy.
    • This transformation is further driven by India's emphasis on emerging technologies such as artificial intelligence (AI), cloud computing, and automation, which are redefining traditional job roles and generating new opportunities.

Key Facts about India Skills Report:

  • Published by: Wheebox in association with the All India Council for Technical Education, Confederation of Indian Industry and Association of Indian Universities.
  • It is the culmination of an exhaustive evaluation of candidates who participated in the Global Employability Test (GET) conducted across India. 
  • This comprehensive assessment is designed to benchmark employability skills against global standards, and provides deep insights into the readiness of India's talent pool for emerging job markets. 
  • Significance: 
    • By evaluating candidates across diverse domains, the report captures critical trends in skills demand, sectoral employability, and regional talent distribution. 
    • This will serve as a vital resource for policymakers, academia, and industries.

‘Emigration Check Required’ (ECR Countries) 

Context: Recent incident of Indian workers having been recruited by Russian Army for participation in the Russia- Ukraine war has raised concerns regarding the vulnerable situation and exploitation of Indian emigrants as workers in foreign nations. 

This has in turn given rise to demand for the government to review its procedures of emigration to countries in conflict, updating the list of 18 “Emigration Check Required” countries, so that the contracts of Indians travelling abroad for such work are verified more thoroughly and they are advised better along with providing adequate protection.

About Emigration Check Required Countries

  • Formulated under the Emigration Act, 1983.
  • Emigration Act 1983 has provided two bodies:
    • Protector General of Emigrants - Responsible for protecting the interests of Indian workers going abroad.
    • Protector of Emigrants - Responsible for granting emigration clearance to the intending emigrants
  • ECR nations are those countries that do not have strict laws regulating the entry and employment of foreign nationals. They also do not provide avenues for grievance redressal.
  • All persons having ECR endorsed Passports and going to any of the 18 ECR countries for taking up employment require emigration clearance from the Protector of Emigrants. 
  • But ECR passport holders going to any ECR country for purposes other than employment do not require emigration clearance. 
  • Currently, there are 18 ECR countries:
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About Protector General of Emigrants:

  • Statutory body under Ministry of External Affairs constituted under the Emigration Act, 1983.
  • Responsible for protecting the interest of Indian workers going abroad.

Powers of Protector General of Emigrants are:

  • Power to grant the Registration Certificate (RC) to recruitment agency under Section 11 and 12 of the Emigration Act, 1983 and renew the same under Section 13 of the Act.
  • Power to suspend, cancel and revoke the RC under Section 14 of the Act.
  • Power to issue permit to the foreign employer (FE) and Project Exporter (PE) under Chapter IV of the Act.
  • Power to sanction prosecution for offences and penalties under Section 24 and 25 of the Act.
  • Power to search, seize and detain persons/conveyance, etc. conferred to an officer of customs under the Customs Act, 1962.
  • Power to prescribe any return, record or register for the Recruitment agency and inspect the same as well at their office under Section 36 of the Act.
  • Power of civil court under Section 37 of the Act.

Protectors of Emigrants:

  • Statutory body responsible for granting emigration clearance to the intending emigrants as per the procedure prescribed under the Emigration Act, 1983. 
  • The Protectors of Emigrants shall perform the functions assigned to them by this Act under the general superintendence and control of the Protector General of Emigrants.

Powers of Protector of Emigrants are:

  • To protect and aid with his advice all intending emigrants and emigrants.
  • Oversee all the provisions of this Act and of the rules made there under to be compiled with.
  • Inspect, to an extent and in a manner as may be prescribed-any emigrant conveyance, or any other conveyance if he has reason to believe that any intending emigrant or emigrants are proceeding from, or returning to, India, to or from a place outside India by such other conveyance.
  • Inquire into the treatment received by emigrants during their voyage or journey to, and during the period of their residence in the country to which they emigrated and also during the return voyage or journey to India and report thereon to the Protector General of Emigrants or such other authority as may be prescribed.
  • Aid and advise emigrants who have returned to India.

List of Persons exempted from ECR provisions:

  • Holders of Diplomatic/Official Passports. 
  • Gazetted Government Servants. (1)
  • Income-tax payers (including Agricultural Income Tax payees) in their individual capacity. (2)
  • All professional degree holders, such as Doctors holding MBBS degrees or Degrees in Ayurved or Homoeopathy; Accredited Journalists; Engineers; Chartered Accountants; Lecturers; Teachers; Scientists; Advocates etc. (3)
  • Spouses and dependent children of the category of persons listed from (1) to (3). 
  • Persons holding class 10 or higher qualification. 
  • Persons holding permanent immigration Visas, such as the visas of UK, USA and Australia. 
  • Persons possessing two years diploma from any institute recognized by the National Council for Vocational Training (NCVT) or State Council of Vocational Training (SCVT) or persons holding three years diploma/equivalent degree from institutions like Polytechnics recognized by Central/State Governments. 
  • Nurses possessing qualification recognized under the Indian Nursing Council Act, 1947. 
  • All persons above the age of 50 years. 
  • All persons who have been staying abroad for more than three years (the period of three years could be either in one stretch or broken) and their spouses. 
  • Children below 18 years of age. 

Higher pension: EPFO offices told to work out dues of subscribers (Note about EPFO)

Context: The Employees’ Provident Fund Organisation (EPFO) has issued an internal circular directing its regional offices on the method to calculate the dues of subscribers who apply for higher Provident Fund (PF) pensions.

About EPFO:

  • The Employees' Provident Fund came into existence with the promulgation of the Employees' Provident Funds Ordinance on the 15th of November 1951.
  • It was replaced by the Employees' Provident Funds Act, of 1952.
  • The Employees' Provident Funds Bill was introduced in the Parliament as Bill Number 15 of the year 1952 as a Bill to provide for the institution of provident funds for employees in factories and other establishments.
  • The Act is now referred to as the Employees' Provident Funds & Miscellaneous Provisions Act, 1952 which extends to the whole of India.
  • The Act and Schemes framed there under are administered by a tri-partite Board known as the Central Board of Trustees, Employees' Provident Fund, consisting of representatives of Government (Both Central and State), Employers, and Employees.
  • The Central Board of Trustees administers a contributory provident fund, a pension scheme and an insurance scheme for the workforce engaged in the organized sector in India.
  • The Board is assisted by the Employees’ PF Organization (EPFO), consisting of offices at 138 locations across the country.
  • The Organization has a well-equipped training set-up where officers and employees of the Organization as well as Representatives of the Employers and Employees attend sessions for pieces of training and seminars.
  • The EPFO is under the administrative control of the Ministry of Labour and Employment, Government of India.
  • EPFO Organisation Structure (Annual Report 2019-20) The Board operates three schemes - EPF Scheme 1952, Pension Scheme 1995 (EPS) and Insurance Scheme 1976 (EDLI).
  • EPFO is one of the World's largest Social Security Organisations in terms of clientele and the volume of financial transactions undertaken.
  • At present it maintains 24.77 crore accounts (Annual Report 2019-20) pertaining to its members.

A top-down code

Context: The central government has codified 29 labour laws into 4 labour codes but, labour legislation is under the concurrent list so the responsibility of framing the rules related to these codes lies with states but they have not framed the rules yet which is defeating the very purpose of these codes.

Labour Code (Wage Code) – 2019

  • After 73 years of independence, work is being done to provide wage security, social security and health security to 50 crore workers, covering organized and unorganized sectors.
  • The guarantee of minimum wages is available to 50 crore workers in organized and unorganized sectors.
  • Review of minimum wages every 5 years.
  • Guarantee of timely payment of wages to all workers
  • Equal remuneration to male and female workers.
  • For the first time, around 40 crore workers of the unorganized sector in the country have got this right.
  • To remove regional disparity in minimum wages the provision of floor wage has been introduced.
  • The determination of minimum wages has been made easy. It will be based on criteria such as skill level and geographical area.
  • From 28.08.2017 Payment of Wages Act has increased the wage ceiling from Rs. 18000 to Rs. 24000.

Social security code 2020

  • Through a small contribution, the benefit of free treatment is available under hospitals and dispensaries of ESIC.
  • The doors of ESIC will now be opened for the workers of all sectors and the unorganised sector workers.
  • Expansion of ESIC hospitals, dispensaries and branches up to the district level.
  • This facility is to be increased from 566 districts to all 740 districts of the country.
  • Even if a single worker is engaged in hazardous work, he would be given ESIC benefit.
  • Opportunity to join ESIC for platform and gig workers engaged in new technology.
  • Plantation workers get the benefit of ESIC.
  • Institutions working in hazardous areas are to be compulsorily registered with ESIC.

Expansion of Social Security

  • The benefit of a pension scheme (EPFO) to all workers of organized, unorganized and self-employed sectors.
  • Creation of social security fund for providing comprehensive social security to the unorganized sector.
  • The requirement of minimum service has been removed for payment of gratuity in the case of fixed-term employees.
  • Employees engaged on fixed terms get the same social security benefit as permanent employees.
  • Creating a national database of workers of the unorganized sector through registration on Portal.
  • Employers employing more than 20 workers to mandatorily report vacancies online.
  • A Universal Account Number (UAN) for ESIC, EPFO and Unorganised Sector workers.
  • Aadhaar-based Universal Account Number (UAN) to ensure seamless portability.

OSH Code (Occupational, Safety, Health and Working Conditions Code) - 2020

  • Various provisions in the OSH Code will ease the lives of the Inter-State Migrant Workers.
  •  Anomalies of the Inter-State Migrant Workers Act, of 1979 have been comprehensively addressed in the OSH Code. Earlier only workers appointed by a contractor were recognized as Inter-State Migrant Workers. However, under the new provisions of the Code, workers can be Aatmanirbhar as they can now register themselves as Inter-State Migrant Workers on the national portal. By this provision, the worker would get a legal identity which would enable them to get the benefits of all social security schemes.
  • A provision has been made for employers to provide a travelling allowance annually to an Inter-State Migrant Worker for undertaking a to-and-fro journey to his native place.
  • Providing of appointment letters to the workers has been made mandatory.
  • Mandatory, free annual health check-ups of the workers to be provided by the employers.
  • For a worker engaged in building and other construction work in one State and moving to another State, benefit from the Building and Other Construction Workers’ Cess fund will be provided.
  • Under the “One Nation - One Ration Card”, an Inter-State Migrant Worker would get a ration facility in the State he is working in and the remaining members of his family would be able to avail of the ration facility in the State where they reside.
  • Mandatory helpline facility in every State for the resolution of Inter-State Migrant Workers’ grievances.
  • A national database is to be created for the Inter-State Migrant Workers.
  • Instead of 240 days, now if a worker has worked 180 days, he shall be entitled to one-day leave for every 20 days of work done.
  • Women’s Empowerment through the Labour Codes
  • Right to women workers to work in all types of establishments.
  • Women have been given the right to work at night with their consent and it has also been ensured that the employer would make adequate arrangements to provide safety and facilities to women workers at night.
  • The Maternity Benefit Act was amended in 2017 to increase the paid Maternity leave for women workers from 12 to 26 weeks and ensure mandatory crèche facility in all establishments having 50 or more workers.

Industrial Relations (IR) Code, 2020

  • In case of job loss, a worker will get benefits under the Atal Bimit Vyakti Kalyan Yojna.
  • Under the Atal Bimit Vyakti Kalyan Yojna, a worker of the organized sector who loses his job gets financial aid from the Government. This is a type of unemployment allowance, the benefit of which is admissible to the workers covered under the ESI Scheme.
  •  At the time of retrenchment, a worker would Chapter 8 New Labour Code For New India 20 be provided 15 days’ wages for re-skilling. The wages would be credited directly into the bank account of the worker so as to enable him to learn new skills.
  • Faster justice for the workers through the Tribunal.
  • Workers’ disputes are to be resolved within a year in the Tribunal.
  • Industrial Tribunals to have 2 members to facilitate faster disposal of cases.
  • In industrial establishments, a Trade Union having 51 per cent votes shall be recognised as the sole negotiating union which can make agreements with employers.
  • In industrial establishments in which no trade union gets 51 per cent votes, a negotiating council of trade unions shall be constituted for making agreements with employer.

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